Buy IP or PPOR first?

[theparlourroom]

I am just beginning my research into purchasing property and I was hoping to get some advice about the pros and cons of buying a PPOR vs IP first. Ultimately, I would like to own my own home as well as be earning income from several investment properties.

At the moment, I can't afford to buy a PPOR in a suburb I'd ultimately like to live (unless it was a studio apartment, and that is *not* the dream). But I have read that if you take funds/equity from an IP to purchase a PPOR you lose the tax benefits. But the longer I wait to buy my own place, the longer I waste money on rent.

Any advice you can give would be very much appreciated. Thanks in advance!

 

[Peter Parker]

I am just beginning my research into purchasing property and I was hoping to get some advice about the pros and cons of buying a PPOR vs IP first.

Buying IPs first is almost certainly the way to go:

Advantages of this:

* Interest is tax deductible
* Other costs eg repairs & rates also deductible
* Rental income helps serviceability
* Greater flexibility of locations as your decision is driven purely by investment considerations, not your own convenience.
* If renting, able to live in an area or in a house better than you can afford to buy

Disadvantages:

* Are subject to capital gains tax if you sell (but this is not a biggie, you only pay if you sell and this is in future dollars that you'd be in a better position to afford)
* Don't get the first homebuyers grant on the purchase (but not really a problem as you can still get later when you do buy your own home)

Main qualifications to this are if you're in a country town and/or can do the property up cheaply to increase its value while living in it. Or maybe are building your own home in the country (where the Vic govt offers a generous subsidy. In these cases buying your own home may be preferable to buying it as an IP. But in most cases the above points are more pertinent.

 

[monalisa]

In NSW you will loose the stamp duty exemption when you purchase your PPOR - if the investment property is purchased first.... I think this was goint to be phased out at some point, but unsure.

 

[artlez]

In NSW you will loose the stamp duty exemption when you purchase your PPOR - if the investment property is purchased first.... I think this was goint to be phased out at some point, but unsure.

Yeah this is the case so many people live in it or 'live in it' for 6 months then move out.

 

[theparlourroom]

I am in NSW, so stamp duty considerations are important to me. As I'm just beginning (and thus conservative) I think I will probably stick to IPs in NSW too. There is so much to consider! The research alone is a fulltime job. Thanks to everyone for your replies and help.

 

[monalisa]

I am in NSW, so stamp duty considerations are important to me. As I'm just beginning (and thus conservative) I think I will probably stick to IPs in NSW too. There is so much to consider! The research alone is a fulltime job. Thanks to everyone for your replies and help.

Good luck with it. Surely takes up a lot of time.